UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 | ||
FORM 8-K CURRENT REPORT | ||
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
Date of Report (Date of earliest event reported): February 9, 2016 | ||
CIVITAS SOLUTIONS, INC. (Exact name of registrant as specified in its charter) | ||
Delaware (State or other jurisdiction of incorporation) | 001-36623 (Commission File Number) | 65-1309110 (IRS Employer Identification No.) |
313 Congress Street, 6th Floor Boston, Massachusetts 02210 (Address of Principal executive offices, including Zip Code) | ||
(617) 790-4800 (Registrant's telephone number, including area code) | ||
(Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description of Exhibit | ||
99.1 | Press Release issued by Civitas Solutions, Inc. on February 9, 2015. |
CIVITAS SOLUTIONS, INC. | |||
/s/ Denis M. Holler | |||
Date: February 9, 2016 | Name: | Denis M. Holler | |
Title: | Chief Financial Officer |
Exhibit No. | Description of Exhibit | ||
99.1 | Press Release issued by Civitas Solutions, Inc. on February 9, 2016. |
• | First quarter net revenue increased 3.3% to $345.7 million; excluding at-risk youth ("ARY") divested operations net revenue increased by 5.3% |
• | First quarter Adjusted EBITDA decreased 10.3% to $36.3 million, primarily due to a previously announced $4.2 million benefit in the first quarter of fiscal 2015 |
• | First quarter net loss was $5.6 million, compared to a net loss of $3.4 million in the first quarter of fiscal 2015 |
• | Completed two acquisitions with total annual revenues of approximately $8.8 million |
• | Human Services net revenue of $277.7 million (80.3% of total net revenue), an increase of 2.1% compared to the first quarter of fiscal 2015; and |
• | Post-Acute Specialty Rehabilitation Services net revenue of $68.0 million (19.7% of total net revenue), an increase of 8.6% compared to the first quarter of fiscal 2015. |
* | The modeling guideline for our annual stock compensation expense includes $10.5 million of expense related to certain awards under our former equity compensation plan that vested in October 2015. The vesting of these awards impacted the allocation of the shares of Civitas that were distributed from NMH Investment, LLC to our private equity sponsor and management and not the number of shares outstanding. This expense is not deductible for tax purposes. |
Select Financial Highlights | |||||||
($ in thousands, except share and per share data) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
December 31, | |||||||
2015 | 2014 | ||||||
Gross revenue | $ | 349,736 | $ | 338,569 | |||
Sales adjustments | (3,989 | ) | (3,979 | ) | |||
Net revenue | 345,747 | 334,590 | |||||
Cost of revenue | 271,012 | 257,558 | |||||
Operating expenses: | |||||||
General and administrative expenses | 49,542 | 40,308 | |||||
Depreciation and amortization | 17,987 | 17,210 | |||||
Total operating expenses | 67,529 | 57,518 | |||||
Income from operations | 7,206 | 19,514 | |||||
Other income (expense): | |||||||
Management fee of related party | — | (162 | ) | ||||
Other income (expense), net | (815 | ) | 140 | ||||
Extinguishment of debt | — | (14,343 | ) | ||||
Interest expense | (8,573 | ) | (10,905 | ) | |||
Loss from continuing operations before income taxes | (2,182 | ) | (5,756 | ) | |||
Provision (benefit) for income taxes | 3,392 | (2,371 | ) | ||||
Loss from continuing operations | (5,574 | ) | (3,385 | ) | |||
Loss from discontinued operations, net of tax | (30 | ) | (55 | ) | |||
Net loss | $ | (5,604 | ) | $ | (3,440 | ) | |
Loss per common share, basic and diluted | |||||||
Loss from continuing operations | $ | (0.15 | ) | $ | (0.09 | ) | |
Loss from discontinued operations | — | — | |||||
Net loss | $ | (0.15 | ) | $ | (0.09 | ) | |
Weighted average number of common shares outstanding, basic and diluted | 37,095,279 | 36,950,000 | |||||
Additional financial data: | |||||||
Program rent expense | $ | 12,896 | $ | 12,039 |
Reconciliation of Non-GAAP Financial Measures | |||||||
($ in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Net loss | $ | (5,604 | ) | $ | (3,440 | ) | |
Loss from discontinued operations, net of tax | 30 | 55 | |||||
Provision (benefit) for income taxes | 3,392 | (2,371 | ) | ||||
Interest expense, net (a) | 8,349 | 10,880 | |||||
Depreciation and amortization | 17,987 | 17,210 | |||||
EBITDA | $ | 24,154 | $ | 22,334 | |||
Adjustments: | |||||||
Management fee of related party (b) | — | 162 | |||||
Stock-based compensation (c) | 11,719 | 1,160 | |||||
Extinguishment of debt and related costs (d) | — | 14,343 | |||||
Long-term compensation plan payment (e) | — | 2,470 | |||||
Exit costs(f) | 2,140 | — | |||||
Contingent consideration adjustment (g) | (2,945 | ) | — | ||||
Sale of business(h) | 1,250 | — | |||||
Adjusted EBITDA | $ | 36,318 | $ | 40,469 | |||
Supplemental Information | |||||||
Operating losses for new starts (i) | $ | 1,943 | $ | 1,284 | |||
Pro forma effect of acquired EBITDA (j) | 129 | 561 |
(a) | For the three months ended December 31, 2015, Interest expense, net includes the reversal of $0.2 million of interest expense associated with acquisition related contingent consideration liabilities and $0.3 million of interest income included in Other income (expense) in the Statement of Operations. For the three months ended December 31, 2014, Interest expense, net includes $25 thousand of interest income included in Other income (expense) in the Statement of Operations. |
(b) | Represents reimbursable expenses under our management agreement with our private equity sponsor that were incurred prior to the termination of this agreement in September 2014. |
(c) | Represents non-cash stock-based compensation expense. For the three months ended December 31, 2015, stock-based compensation includes $10.5 million of expense related to certain awards under our former equity compensation plan that vested in connection with our secondary offering and the distribution of our shares held by NMH Investment, LLC in October 2015. The vesting of these awards impacted the allocation of the shares of Civitas that were distributed from NMH Investment, LLC to our private equity sponsor and management and not the number of shares outstanding. |
(d) | Represents the costs associated with the redemption of $162 million of senior notes including the write-off of the associated deferred financing costs and original issue discount. |
(e) | Represents payments associated with the termination of an equity-like plan for employees of the CareMeridian business unit made in connection with our initial public offering ("IPO"). |
(f) | Represents expenses of $0.5 million for severance and $1.6 million for lease terminations associated with our ARY divestitures. |
(g) | Represents the fair value adjustment associated with acquisition related contingent consideration liabilities. The associated impact to the accretion of interest of $0.2 million is included within Interest expense, net. |
(h) | Represents the loss recorded on the sale of our ARY North Carolina business. |
(i) | Operating losses from new starts represent losses from any new start programs initiated within 18 months of the the periods presented that had operating losses during the respective periods. Net operating loss from a new start is defined as its revenue for the period less direct expenses but not including allocated overhead costs. |
(j) | Represents the estimated additional EBITDA from acquisitions made during the periods presented assuming the acquisitions had occurred on the first day of each respective period. |
Selected Balance Sheet and Cash Flow Highlights | |||||||
($ in thousands) | |||||||
(unaudited) | |||||||
As of | |||||||
December 31, 2015 | September 30, 2015 | ||||||
Cash and cash equivalents | $ | 34,194 | $ | 41,690 | |||
Working capital (a) | 67,863 | 60,150 | |||||
Total assets | 1,052,201 | 1,063,184 | |||||
Total debt (b) | 649,884 | 651,643 | |||||
Net debt (c) | 565,690 | 559,953 | |||||
Stockholders' equity | 129,447 | 121,275 | |||||
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Cash flows provided by (used in): | |||||||
Operating activities | $ | 6,617 | $ | (5,657 | ) | ||
Investing activities | (13,073 | ) | (21,698 | ) | |||
Financing activities (d) | (1,040 | ) | (163,609 | ) | |||
Purchases of property and equipment | (9,122 | ) | (8,886 | ) | |||
Acquisition of businesses, net of cash acquired | (4,156 | ) | (12,518 | ) |
(a) | Calculated as current assets minus current liabilities. |
(b) | Includes obligations under capital leases. |
(c) | Represents net debt as defined in our senior credit agreement (total debt, net of cash and cash equivalents and letters of credit and restricted cash of $50 million). |
(d) | A portion of the IPO proceeds of $182.2 million that we received in fiscal 2014 was used to retire $162.0 million of senior unsecured notes on October 17, 2014 and pay the related redemption premium and fees. |